Saudi awarded contracts total SR1.2 trn in 2008-2013

Saudi Arabia awarded construction contracts worth a total SAR1.2 trillion between 2008 and the third quarter of 2013 and nearly 68 per cent of them involved infrastructure, according to the Gulf kingdom’s largest bank.

About 57 per cent of the infrastructure projects are being executed while the rest would be completed in 2014, indicating construction activity would remain in full swing, National Commercial Bank (NCB) said in an 11-page infrastructure report.

A breakdown showed the power sector accounted for 29 per cent of the total contract awards for infrastructure related projects while the transportation sector came in second with 22 per cent followed by the residential real estate sector with 12 per cent.

“The value of awarded contracts in the construction sector between 2008 and the third quarter of 2013 reached a staggering SAR1.2 trillion, of which 68 per cent or SAR805 billion was spent on infrastructure related projects,” NCB said.

The report showed the current value of projects being executed in the infrastructure sector represents 57 per cent or SAR597 billion of the overall project value. “Given the high value of awarded contracts in recent years coupled with a lower number of project cancellations, post global financial crises, the level of growth in construction activity is expected to grow in parallel with the boom in contract awards.”

According to the report, completed projects represent a 30 per cent share of the overall projects while projects in the operation phase constitute an 11 per cent share.

Of the projects that were executed between 2008 and Q3’13, approximately SAR230 billion worth of infrastructure projects are expected be completed by 2014, it said.

“The high value of completed projects is mainly attributed to the value of awarded contracts in the infrastructure sector during 2011-2012, where nearly SAR288 billion worth of contracts was awarded.”

NCB said it expected the Saudi private sector, the largest and richest in the Middle East, to have a bigger share in infrastructure development in the near future.

“The private sector is expected to take on a more significant role in the development of the Kingdom’s infrastructure to help ease the pressure on the government,” it said.

“The government’s desire to allow private entities to take on a larger share of partnerships reflects the size of the projects that are underway and signals that the government is overburdened with the pressure to meet its growing commitments.”

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